After checking out GM’s new entry to the green car market, I was surprised — practically amazed — and convinced the new hybrid design could be a game changer. The engineering advancements that GM was showing off in the Yukon hybrid GM brought to Manhattan on a recent morning were impressive in their own right — more on that later. Likewise, the scope of GM’s vision to roll out the new system into new models left me more convinced of the company’s commitment to a technology it was dismissive of a few years back. Indeed, GM has been talking about this new so-called “2-mode hybrid” for years. Whether GM could scale it up into full production was a big question, though. The proof sat parked in the guise of an aerodynamically sculpted SUV (that sounds like an oxymoron, I know, but is true) parked outside a restaurant in New York’s art gallery district. It goes on sale later this year.

The new hybrid design is a smart blend, joining a smart, new organization of the gas-electric drive train with GM's existing engine technology that imperceptibly turns off cylinders at cruising speeds. The combination improves mileage in city traffic and also while cruising on highways. GM pledges this approach will deliver a 20-25% mileage boost overall, even on big SUVs and pickups, and without sacrificing the horsepower American car buyers crave. Given GM's offerings in the hybrid market to date -- so-called mild hybrids like the Chevy Silverado with unimpressive mileage gains -- the new technology is a giant leap forward.

First the technical details. If you could dismantle a Toyota or Ford hybrid today, you'd find a chunky electric motor connected up to the motor and drive train. Yet if you disassemble a Yukon, you won't see any electric motor. That's because GM was able to sneak a powerful electric generator into the big case that holds the transmission gears. This has many benefits. It saves space, since the transmission case is no bigger, even with the extra electric bits. The design should also make it easier for GM to adapt hybrid drive trains into other cars. And there may energy efficiency advantages in this approach (compared with the Toyota, Honda, Ford design) because it cuts down on the number and complexity of mechanical linkages necessary to join electric motor to gas engine. (Any mechanical engineers out there want to weigh in?). As an added plus, it frees up precious underbody space for batteries, regenerative braking systems, and the other goodies that make hybrids go.

On a cruise north up 10th Avenue, to Manhattan's northern reaches, though about as un-nimble as any big SUV in city traffic, the Yukon was quiet and smoother than its gas-only cousin. This, explained Mark Cieslak, vehicle chief engineer of GM's full size truck hybrids who's been driving an early production hybrid Yukon for months, is because the battery pack and electric motor have enough kick to take this 5,000-lb vehicle up to city road speeds without the 6 liter V-8 gas engine kicking in. Once at highway speeds, driving south along the Hudson River, the engine saves gas by deactivates cylinders not needed to maintain a 65-mph clip.

Back to the big view. In debuting the Yukon, GM representatives also walked a group of reporters through their hybrid strategy plan for years to come. Earlier, I blogged about my skepticism that GM could beat Toyota to a plug-in electric hybrid. But step by step they outlined makes me think they could do it. The hybrid GMC Yukon, and its doppleganger the hybrid Chevy Tahoe, will hit sales lots late this year. Soon there after, the 2-mode hybrid will appear in 2008 models, including a hybrid Cadillac Escalade -- what better way to assuage SUV guilt? -- followed by 2-mode hybrid treatments of the Chevy Silerado/ GMC Sierra pickup, and a similar upgrade to the Saturn Vue Green Line all in 2008. Sure enough, at the end of this road map, in 2009/2010, GM shows two plug-in hybrids: the Saturn Vue Green Line and the Chevrolet Volt.

Oddly, GM won't be deploying this 2-mode system into any sedans, just SUVs and trucks. Given GM's success (at least till $3 gas) with trucks and SUVs, this makes sense: Americans don't necessarily want sedans, they're justing more of them now since they get better mileage. If you can deliver a small SUV with car like mileage, who wouldn't opt for the bigger vehicle? This omission may be because the new all-in-one transmission-plus-electric-motor is too bulky to fit into smaller car forms.